☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
26 March 2014 | Gurjit Degun
Managing expectations, focusing on outcomes, a proactive approach, and getting the key information from suppliers can help achieve better outcomes in contract management.
At the Procurex South conference in London yesterday, Paul Mallory, vice president of professional development at the International Association for Contract and Commercial Management outlined his top tips.
• Expectation management. “We need realism in the process,” said Mallory. “No one wants to talk about the nasty stuff like what if something goes wrong, but you need to consider these things in order to put mechanisms in place.”
• Focus on outcomes. This means buyers need to think about goals, key drivers and scope, explained Mallory. “Think about what steps we could take before we launch the tender process that might help us get our heads around this project,” he said.
• Get the key information from suppliers. “Don’t get lost in a sea of detail,” Mallory told delegates. “I think we feel comfortable when we’ve got several warehouses full of documents and proposals.”
• Manage contracts proactively throughout the contracting life cycle. “You can’t just assume that everything will work out just fine and everyone will work well,” said Mallory.
• Professional risk management. “It’s fabulous that you’ve got a brilliant risk register for sign-off, but if it then goes into the cupboard and nobody acts on it, you’re still going to have problems,” Mallory added.
• Retain good in-house resource to manage outsourcing. “I think people often overlook that you still need to proactively contract manage that project,” Mallory explained.
He also shared his advice to ensure contracts provide optimum value:
• Choose your contractor as you would choose your house builder. “I would suggest you think about what would matter to you when trying to find a house builder,” he said. “I think we need to think a bit more broadly about how we increase our trust and confidence in suppliers before we select them.”
• Set up the contract for success. Mallory said people immediately think of including liquidated damages within contracts in case something goes wrong. But he thinks that these clauses often do not help as they do not solve the problem or result in a better outcome.
• Set the relationship up for success. “One of the things that we need to consider is that there are human beings on the other side and we have to consider what drives them. What kinds of behaviour are we looking for? And what kinds of suppliers are we looking for?, said Mallory.
• Trust and verify. “Trust your relationship with key suppliers but also verify that they are performing,” he said.
• Expect and manage change. “It’s one of the biggest areas where things can go wrong, change after the contract is signed,” explained Mallory.
• Expect the unexpected.
• Learn and share. “Look at the successful projects and find out what they did differently and look at the projects that went horribly wrong and find out what went wrong and what we might have done differently in those cases,” he added.